- Scale and capabilities of the combined company position Elanco
for the long term as a leader in the attractive, durable animal
health industry.
- Combines Elanco’s longstanding focus on the veterinarian with
Bayer Animal Health’s direct-to-consumer expertise to open new
opportunities to fuel growth. Enables Elanco to capitalize on
emerging trends accelerated by the COVID-19 pandemic, including pet
owners’ increased desire to access care and products via online,
retail, telemedicine, and direct to the doorstep.
- Transaction strengthens Elanco’s Innovation, Portfolio,
Productivity (IPP) strategy, advancing portfolio transformation to
balance mix between the pet health and farm animal businesses.
- Transaction valued at close at $6.89 billion, funded by $5.17
billion in cash and 72.9 million shares to Bayer.
Elanco Animal Health Incorporated (NYSE: ELAN) today announced
it has closed the acquisition of Bayer Animal Health. The
transaction, valued at $6.89 billion, expands Elanco’s scale and
capabilities, positioning the company for the long term as a leader
in the attractive, durable animal health industry.
“Nearly two years into our journey as an independent company, we
have made significant progress in creating a purpose-driven,
independent global company dedicated to animal health – all while
weathering the century’s most significant animal and human health
pandemics: African Swine Fever and COVID-19,” said Jeff Simmons,
president and CEO of Elanco. “Delivering on the timely close of the
acquisition and bringing momentum into Day 1 in this challenging
environment underscores the deep capability and disciplined
execution from both companies.”
“This milestone is another key step in Elanco’s journey. But,
ultimately, today is about improving the lives of animals, people
and improving the health of the planet. Pets and protein have never
been more important,” Simmons said. “Food supply disruptions and
increasing unemployment are driving food security challenges around
the world. At the same time, research shows increased time at home
has changed the long-term relationship between pets and their
owners, as pets increasingly provide valuable emotional support. We
know making life better for animals, simply makes life better.”
Meanwhile, the pandemic has accelerated key trends transforming
the industry, particularly pet owners’ desire to access veterinary
care and animal health products in a variety of forms, from
curbside care and telemedicine to online purchases shipped direct
to the doorstep. The combination of Elanco and Bayer Animal Health
joins Elanco’s existing strong relationship with the veterinarian
with Bayer Animal Health’s focus in retail and online in order to
create an omni-channel leader best positioned to serve
veterinarians and pet owners where they want to shop.
This acquisition strengthens Elanco’s Innovation, Portfolio,
Productivity (IPP) strategy, which the company has been executing
on since before its IPO in 2018. Both companies come to closing
with a disciplined focus on the strategy and diligent execution to
drive momentum.
- Innovation: Elanco’s robust R&D pipeline is now
bolstered with five expected launch equivalents from Bayer –
bringing Elanco’s anticipated total to 25 by 2024 – with five of
those expected to launch by the end of 2021. The transaction also
adds new R&D capabilities, including innovative dosing and
delivery technology platforms, and provides access rights to
Bayer’s Crop Science R&D pipeline and de-prioritized clinical
pharma assets.
- Portfolio: The combination expands Elanco’s portfolio to
provide farmers, pet owners, and veterinarians more comprehensive
animal health solutions. By combining Elanco’s longstanding focus
on the veterinarian with Bayer’s direct-to-consumer experience, the
transaction opens new opportunities for growth and expands Elanco’s
omni-channel presence, enabling the company to meet customers where
and how they want to shop.
Pet Health: The combination elevates Elanco’s pet business to
approximately 50 percent of revenues and nearly triples the
company’s international pet health business. This expanded
portfolio of care provides for pets at all ages and stages, from
disease prevention and wellness for the youngest puppies to helping
pets remain an active, central part of the family in their later
years. The transaction also broadens Elanco’s pet parasiticide
portfolio with topical treatments and collars, making the
blockbuster Seresto collar Elanco’s top product globally.
Farm Animals: The combined company brings together complementary
farm animal portfolios that position Elanco to serve an even
broader spectrum of the industry and better leverage data, and
services for customers. The transaction adds a number of anchor
cattle brands, enhances the company’s global bio-protection
portfolio, and expands the company’s aqua presence into warm water
fish.
- Productivity: Elanco plans to leverage its extensive
integration experience – and ownership mindset – to efficiently and
quickly integrate the new business. The combined company is
expected to generate significant operating cash flow as a result of
the durable industry and resilient portfolios. While the timing of
achieving goals from the deal announcement have been impacted by
the COVID-19 pandemic, the company still expects to deliver $275 -
$300 million in synergies by 2025.
“Most importantly, today is about the farmers, veterinarians,
and pet owners we serve. If COVID-19 has made anything clear – it’s
that the world has never needed animals and the work farmers and
veterinarians do more,” Simmons said. “Together, we are better
positioned to advocate for our customers, to deliver solutions to
their greatest unmet needs, so they can keep healthy, sustainably
sourced meat, milk, fish and eggs in the center of the dinner table
and healthy, active pets in the center of families. Together, we
have the potential to improve animal health and the lives of
billions.”
Financing Terms
Upon close, Bayer AG received $5.17 billion in cash, comprised
of proceeds from the company’s equity and tangible equity unit
issuances in the first quarter of 2020 and debt financing from the
Term Loan B priced in the first quarter of 2020 that closed with
the transaction closing. Additionally, approximately 72.9 million
shares of Elanco Animal Health common stock were issued to Bayer
AG. These shares will be subject to a lock up, where Bayer cannot
sell any shares for the first 90 days. In the second 90 days, 50
percent of shares are eligible for sale and the remainder may be
sold after 180 days. Moreover, Elanco has completed the required
anti-trust divestures that had been previously announced. The
divested products had 2019 revenue in the range of $120 million to
$140 million.
Advisors
Goldman Sachs acted as financial advisor to Elanco and Paul,
Weiss, Rifkind, Wharton & Garrison LLP, Hengeler Mueller and
Slaughter and May acted as legal counsel to Elanco.
ABOUT ELANCO
Elanco Animal Health (NYSE: ELAN) is a global leader in animal
health dedicated to innovating and delivering products and services
to prevent and treat disease in farm animals and pets, creating
value for farmers, pet owners, veterinarians, stakeholders, and
society as a whole. With nearly 70 years of animal health heritage,
we are committed to helping our customers improve the health of
animals in their care, while also making a meaningful impact on our
local and global communities. At Elanco, we’re driven by our vision
of Food and Companionship Enriching life and our Elanco Healthy
Purpose™ CSR framework – all to advance the health of animals,
people and the planet. Learn more at www.elanco.com.
Forward Looking Statements
This press release contains forward-looking statements (as that
term is defined in the Private Securities
Litigation Reform Act of 1995) about our expectations concerning
the combined Elanco and Bayer Animal
Health businesses, including the ability to generate significant
operating cash flow, and reflects Elanco’s current belief.
Forward-looking statements are based on our current expectations
and assumptions regarding our business and other future conditions.
Because forward-looking statements relate to the future, by their
nature, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict. As a
result, our actual results may differ materially from those
contemplated by the forward-looking statements. For further
discussion of these and other risks and uncertainties, see Elanco’s
most recent filings with the United States Securities and Exchange
Commission. Except as required by law, Elanco undertakes no duty to
update forward-looking statements to reflect events after the date
of this release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200803005176/en/
Investor Contact: Tiffany Kanaga +1.302.897.0668
kanaga_tiffany@elanco.com
Media Contact: Colleen Parr Dekker +1.317.989.7011
colleen_parr_dekker@elanco.com
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